Changes to Contract Terms

Question 1

Rescission

Answer 1

Rescission of a K serves to discharge duties under the K
* Occurs when parties agree to rescind their K
* Agreement to rescind is itself a new, binding K supported by consideration

Limitations:
* Mutual rescission may be made orally

Question 2

Rescission

Answer 2

Rescission of a K serves to discharge duties under the K
* Occurs when parties agree to rescind their K
* Agreement to rescind is itself a new, binding K supported by consideration

Limitations:
* Mutual rescission may be made orally
Exception - writing required if the K to be rescinded is subject to the SoF and/or
UCC
* Parties cannot rescind a K if the rights of a third-party beneficiary have vested

Unilateral rescission - when only one party wants to rescind the K
* Usually only granted where there is a defense to K enforcement or formation
* Often occurs as a court ordered remedy where there is a valid defense to K enforcement or formation

Question 3

Modification & Novation

Answer 3

Modification occurs when parties change terms of the original K; novation is a new K that substitutes a new party into the original K

Modification - subsequent change to terms of a K
* Parties agree to discharge original K terms in favor of new terms
* Requriements:
1) Mutual assent - mutual assent of the parties; and
2) Consideration - generally found to be present b/c each party has limited her right to enforce the original K
* UCC - no consideration required for a good-faith modification; must be in writing if it falls within SoF

Novation - parties agree to substitute a new party to perform
* Parties create a new K substituting a new party, who gets benefits and assumes duties that belonged to an original party to the K
* Requirements:
1) All parties, including new party, agree to a new K; and
2) New K extinguishes K duties between original parties
* The original party is excused from performance and no longer has any K obligations or liabilities

Question 4

Accord & Satisfaction

Answer 4

Accord and satisfaction occurs when both parties to an existing K agree to accept different performance in satisfaction of the original, existing obligation
* Accord - agreement to accept alternative performance in satisfaction of the existing obligation ( a new agreement to accept an alternative obligation)
* Satisfaction - completion of the alternative performance

Effect of accord and satisfaction - excuses the original obligation
* If the accord is not satisfied, a party may sue on either the original obligation or the accord
* An accord suspends the original agreement until satisfaction, i.e. parties cannot sue under the original agreement if there has been an accord